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IFRS 1 Amendment: Removal of Fixed Dates for First-time Adopters


IFRS 1, Appendix B, paragraph B2 provides an exception from full retrospective application of the derecognition requirements of financial assets and liabilities in IAS 39 Financial Instruments: Recognition and Measurement ('IAS 39'). The exception states that a first-time adopter of IFRS shall apply the derecognition requirements of IAS 39 prospectively for transactions that occur on or after 1 January 2004. Similarly, IFRS 1, Appendix C, D20, of IFRS 1 allows a first-time adopter of IFRS to apply the requirements of paragraphs AG76 and AG76A of IAS 39 prospectively to transactions entered into after 25 October 2002 or 1 January 2004.

Many entities, particularly in jurisdictions that will be adopting IFRSs, will need to apply IFRS 1 in the near future. Hence, for those entities, the fixed dates in IFRS 1 result in exceptions and exemptions that are largely irrelevant because they only apply to transactions that occurred before 2004.

The IASB published the ED Removal of Fixed Dates for First-time Adopters on 27 August 2010, which proposes that the fixed dates in paragraphs B2 and D20 be changed to refer to the 'date of transition to IFRSs'. EFRAG supported the amendment in its comment letter issued on 29 October 2010. IASB published the final amendment in December 2010. Basically, the text was the same than the ED but deleting the same fixed dates in the text of IFRS 9. EFRAG initiated the endorsement process, but this process was paralised due to some references to IFRS 9 in the text (the amendment was issued in the same document that the amendment introduced by the ED Severe Hyperinflation).

In December 2011, EFRAG issued an Invitation to Comment on its draft endorsement advice and a draft Effect Study Report in respect of the Amendments. Based on the comments received, EFRAG agreed in January 2012 to issue to the European Commission both the positive endorsement advice and the Effect Study Report.
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